Sophie SHAPIRO, Harold S. Shapiro, Toinette Karvas and Richard Karvas, Plaintiffs and Respondents, v. REPUBLIC INDEMNITY COMPANY OF AMERICA, a corporation, Defendant and Appellant. *
Action upon an automobile public liability insurance policy in which judgment was rendered in favor of the plaintiffs from which defendant appeals.
The policy in question was issued to John A. Campbell, Jr. and Pauline Campbell and covered a 1949 Chevrolet automobile owned by them. Among others the policy contains a provision reading in part as follows: ‘Definition of Insured. With respect to insurance for bodily injury liability and for property damage liability the unqualified word ‘insured’ includes the named insured and also includes any person while using the automobile * * * provided the actual use of the automobile is by the named insured or with his permission.' As originally written there was no language in the policy restricting the scope of the foregoing provision other than an endorsement reading in part as follows: ‘Additional Declaration. * * * (b) There is no operator of the automobile under 25 years of age resident in the Named Insured's household or employed as a chauffeur of the automobile.’ Subsequently, however, and following the accident out of which plaintiffs' causes of action arose, the Campbells instituted an action against the defendant for a declaration of rights under the policy. In this action the defendant interposed a cross-complaint for reformation of the policy to express the true intention of the parties. This action resulted in a judgment in favor of defendant whereby the policy was reformed by substituting for the endorsement quoted above one reading as follows: ‘It is agreed that no insurance is afforded by any provision of this policy or of any endorsement attached hereto or issued to form a part hereof while any insured vehicle is being operated, maintained or used by or under the control of a person under twenty-five (25) years of age.’
This judgment was affirmed upon appeal (Campbell v. Republic Indemnity Co., 149 Cal.App.2d 476, 308 P.2d 425) and became final.
Within the policy period and prior to the time that the policy was reformed as hereinabove stated, the insured vehicle while being driven by the named insured's son who was then under the age of 25 years was involved in a collision with an automobile owned and driven by the plaintiff, Harold Shapiro, as a result of which he and the other plaintiffs herein, Sophie Shapiro, Toinette Karvas and Richard Karvas, as well as two other persons, Maxine Friedman and Allen Friedman, who are not parties to this action, sustained personal injuries and the automobile of Harold Shapiro was damaged. These parties thereafter instituted actions against the Campbells and their son and recovered judgments as follows: (1) Sophie Shapiro recovered judgment against Mr. and Mrs. Campbell and their son in the sum of $5,800 of which amount the liability of Mr. and Mrs. Campbell was limited to $3,333; (2) Harold Shapiro recovered judgment against Mr. and Mrs. Campbell in the sum of $600 for property damage and against the som alone in the sum of $500 for personal injuries; the Shapiros also recovered costs in the sum of $98.14; (3) Toinette Karvas recovered judgment against the Campbells' son in the sum of $500; (4) Richard Karvas recovered judgment against Mr. and Mrs. Campbell and their son in the sum of $5,800 of which amount the liability of Mr. and Mrs. Campbell was limited to $3,333; costs were $48.75; (5) Maxine Friedman recovered judgment against Mr. and Mrs. Campbell and their son in the sum of $3,800, said judgment being limited to $3,333 against Mr. and Mrs. Campbell; (6) Allen Friedman recovered judgment against the son alone in the sum of $500; the Friedmans also recovered costs of $47.70.
After the recovery of the aforementioned judgments respondents instituted the present action against the defendant upon the insurance policy. The trial court rendered judgment in favor of the respondents Shapiro in the sum of $6,998.14 together with interest from July 26, 1956, and in favor of the respondents Karvas in the sum of $6,348.75 with interest from July 26, 1956.
At the outset and before addressing ourselves to the contentions of the appellant, it is necessary to dispose of a contention of the respondents. This is to the effect that their rights under the policy are to be determined by the language of the policy as originally written and as it read at the time of the accident in question and not as reformed to read by the judgment in the action between the defendant and the insured Mr. and Mrs. Campbell. The argument is that, as respondents were not parties to the reformation action, they are not bound thereby and the judgment therein is not res judicata as to them. The question of res judicata, however, does not arise. Respondents' rights under the policy are, in any event, measured by the terms of the policy as reformed for they stand in the shoes of the insured and they have no greater rights against the insurer than the insured would have had if they paid the judgments against them and then sued the insurer. Olds v. General Acc. Fire & Life Assur. Corp., 1945, 67 Cal.App.2d 812, 821, 155 P.2d 676; Ford v. Providence Washington Ins. Co., 1957, 151 Cal.App.2d 431, 438–439, 311 P.2d 930; and compare, Valladao v. Fireman's Fund Indemnity Co., 1939, 13 Cal.2d 322, 328, 89 P.2d 643.
Additionally, it is to be noticed that prior to the filing of the action which resulted in the judgment of reformation hereinabove referred to and prior to the institution of the actions by the respondents against the insured, defendant instituted an action against the respondents for declaratory relief seeking a declaration that it was not liable to respondents under the terms of the policy as originally written, which action, however, was dismissed prior to trial. The trial court here concluded that the filing of such action ‘served to affirm the original policy and endorsement,’ and respondents contend that as a result the defendant ‘irrevocably confirmed the terms of the policy and rider’ as originally written. Respondents cite no authorities in support of this proposition and we know of none. The mere fact that the defendant may have previously instituted an action which it later dismissed to secure a declaration that it was not liable to the respondents under the policy as originally written did not preclude it from thereafter seeking and obtaining a judgment reforming the policy to express the true intention of the parties.
The trial court found that the restrictive endorsement which was added to the policy by the judgment of reformation was ineffective as being in contravention of section 415 of the Vehicle Code which at the time of the issuance of the policy read in part as follows: ‘(a) A ‘motor vehicle liability policy,’ as used in this code means a policy of liability insurance issued by an insurance carrier authorized to transact such business in this State to or for the benefit of the person named therein as assured, which policy shall meet the following requirements: * * * (2) Such policy shall insure the person named therein and any other person using or responsible for the use of said motor vehicle or motor vehicles with the express or implied permission of said assured.'
The appellant contends that in so deciding the trial court erred because, so it argues, section 415 applies only to those policies certified as provided in section 414 of the Vehicle Code as proof of ability to respond in damages.1 This identical contention, however, was rejected by the Supreme Court in Wildman v. Government Employees' Ins. Co., 1957, 48 Cal.2d 31, at page 39, 307 P.2d 359, at page 364, where it is said: ‘It appears that section 415 must be made a part of every policy of insurance issued by an insurer since the public policy of this state is to make owners of motor vehicles financially responsible to those injured by them in the operation of such vehicles. Section 402 of the Vehicle Code provides that ‘Every owner of a motor vehicle is liable and responsible for the death of or injury to person or property resulting from negligence in the operation of such motor vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner, and the negligence of such person shall be imputed to the owner for all purposes of civil damages.’ We are of the opinion that for an insurer to issue a policy of insurance which does not cover an accident which occurs when a person, other than the insured, is driving with the permission and consent of the insured is a violation of the public policy of this state as set forth in sections 402 and 415 of the Vehicle Code.'
While the appellant earnestly argues that the Supreme Court was in error in construing section 415 as applying to every motor vehicle policy rather than only to those certified as provided in section 414 as proof of ability to respond in damages, we are bound by the decision of the Supreme Court and are not at liberty to reexamine the question.
Appellant further contends that the effect of the Wildman decision has been overcome by reason of the fact that following it the Legislature amended the first paragraph of the portion of section 415 of the Vehicle Code heretofore quoted to read as follows: ‘(a) A ‘motor vehicle liability policy,’ as used in this chapter means an owner's policy or an operator's policy, or both, of liability insurance, certified as provided in Section 414 as proof of ability to respond in damages, issued by an insurance carrier * * *.' (Italics and strike-out type indicate changes effected by the amendment.)
Appellant argues that by this amendment the Legislature expressed its disapproval of the interpretation accorded this section by the Supreme Court in the Wildman case. The fact, however, that the Legislature may have disagreed with the construction placed upon the language of the section as it read prior to the amendment does not authorize this court to say that the Supreme Court was in error in the construction which it had placed upon it. Undoubtedly, many statutes have been amended to overcome the judicial construction placed upon them, but this does not serve to establish that such judicial decisions were erroneous. If the amendment to section 415 had occurred prior to the decision in the Wildman case it may well be that the Supreme Court would have given consideration to it in interpreting the language of the section as it read prior to the amendment, that is to say, whether by the amendment the Legislature evidenced an intention to change the law or merely to declare what the law had been prior to the amendment. Cf. Union League Club v. Johnson, 18 Cal.2d 275, 278, 115 P.2d 425; Standard Oil Co. of California v. Johnson, 24 Cal.2d 40, 48, 147 P.2d 577. It by no means follows, however, that, if it had done so, the court would have reached a different result. While ‘[l]egislative intent may be manifest by a subsequent act’ (45 Cal.Jur.2d 678), ordinarily, any essential change in the phraseology of a statutory provision will be taken as an indication of a change in the meaning rather than as an interpretation (id. 679). And It may not be doubted that the amendment here involved an essential change in phraseology.
Moreover, even though we were to sustain appellant's contention that section 415 is without application to the policy here this would not serve to aid appellant's cause for the appellant voluntarily assumed liability under section 415 by the insertion in the policy of the following provisions: ‘Condition 8: Financial Responsibility Laws: Such insurance as is afforded by this policy for bodily injury liability or property damage liability shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy. The insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under this paragraph.
‘* * * Condition 23: Terms of Policy Conformed to Statute: Terms of this policy which are in conflict with the statutes of the state wherein this policy is issued are hereby amended to conform to such statute.’
The policy involved in the Wildman case contained provisions identical to those above quoted and concerning these the court said: ‘Inasmuch as sections 402 and 415 of the Vehicle Code set forth the public policy of this state such laws must be considered a part of every policy of liability insurance even though the policy itself does not specifically make such laws a part thereof. We have here, however, a policy containing a clause which provides that the insurance afforded by the policy shall comply with the provisions of the motor vehicle financial responsibility law ‘of any state * * *’ wherein the liability arising out of the ownership, maintenance or use of the automobile may occur.' Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 40, 307 P.2d 359, 364.
In Farmers Ins. Exchange v. Ledesma, 10 Cir., 1954, 214 F.2d 495, 497, the insurance company had issued to one Isdonas a motor vehicle liability policy in New Mexico which by its terms insured the named insured and ‘any person while using the automobile with the permission of the named insured.’ By an endorsement to the policy it was provided that the insurance should not apply while the automobile was being operated outside the limits of an established military or naval reservation unless it was being operated by the named insured or spouse or by any other qualified operator while accompanied by the named insured or spouse. During the policy period one Carter while operating the automobile outside of a military and naval reservation at a time when neither the named insured nor his spouse was present was involved in an accident as a result of which the defendant was injured. The policy contained a further provision substantially identical to condition 8 of the policy here and hereinabove quoted. New Mexico has a financial responsibility law somewhat similar to that of California. While the court there held, as the appellant here contends, that the New Mexico act applied only to ‘motorists who have been involved in accidents or who fail to pay judgments rendered against them for damages resulting from the use and operation of motor vehicles' and as the named insured was not in this category there was no requirement in the law that the liability insurance policy issued to him provide insurance complying with the provisions of the motor vehicle financial responsibility law, proceeded to say (214 F.2d at page 500): ‘But the provision to that effect was voluntarily inserted in the policy with binding force and effect. It made the policy conform to the Act. It imported into the policy the pertinent provisions of the Act. The Act provides that a policy issued under its terms shall insure as the insured the person named therein and any other person using or responsible for the use of such motor vehicle with the consent express or implied of the named insured.’ (Italics ours.)
In the light of the foregoing it is apparent that the provisions of our financial responsibility law were effectively written into the policy and became a part thereof and that the appellant may not be heard to complain that the policy does not provide insurance to the extent of the coverage and limits of liability required by section 415 of the Vehicle Code.
Thus we reach appellant's final contention that, inasmuch as section 415 requires insurance only in the sum of $5,000 for bodily injury to or death of each person as the result of any one accident and $10,000 for bodily injury to or the death of all persons as the result of any one accident, the judgment appealed from is excessive in that it awards in the aggregate a greater sum than the coverage required by section 415. Hence, the question is presented whether the extent of defendant's liability for the bodily injuries sustained by all of the persons as a result of the accident in question is $10,000 as prescribed in section 415 or the policy limit of $20,000.
By virtue of the language of the policy incorporating therein the provisions of the financial responsibility law the defendant agreed, independently of any other provision in the policy, to provide insurance for ‘liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by, such law.’ (Italics ours.) While the provisions of the statute thus incorporated in the policy operate to render ineffective the restrictive endorsement hereinbefore referred to insofar as it undertakes to exclude all liability for injuries occasioned by the operation of the motor vehicle by one under the age of 25 years, we see nothing in the statute to suggest that an insurer in agreeing to afford coverage for such liability may not restrict the extent thereof to the amounts prescribed by the statute irrespective of the limits of the other coverage afforded by the policy. Indeed, subdivision (c) of section 415 expressly provides that the policy of insurance required thereby may ‘contain any agreements, provisions or stipulations not in conflict with the provisions of this code and not otherwise contrary to law.’ If the policy here had provided that no insurance was afforded thereby while the automobile was being operated with the permission of the named insured by one under the age of 25 years except as and to the extent provided in Vehicle Code, section 415, no doubt could arise as to the validity thereof, and when the restrictive endorsement is read in connection with the conditions 8 and 23 of the policy this is in effect what it says. Inasmuch as so construed the policy provides insurance against the liability and to the extent required by section 415 the requirements of the statute are satisfied as well as the public policy embodied therein.
While the question under discussion was not there involved the language of the opinion in Bonfils v. Pacific Automobile Ins. Co., 1958, 165 Cal.App.2d 152, 331 P.2d 766, is pertinent. There the defendant insurance company had issued a policy containing provisions identical with conditions 8 and 23 of the policy in the instant case. The policy also contained a restrictive endorsement to the effect that coverage of the policy should be null and void if the insured vehicle was operated by anyone other than the named insured. While the vehicle was operated by one other than the named insured with the latter's permission it was involved in an accident as a result of which two persons sustained injuries. In speaking of the effect of these two provisions the court said (165 Cal.App.2d at page 159, 331 P.2d at page 770): ‘Interpreted by the rules applicable to policies of insurance, the endorsement in question did not eliminate, limit or modify the foregoing provisions respecting conformance of the policy to statute and compliance with financial responsibility laws. When these provisions and the endorsement are considered together, as they must be, the endorsement had the limited effect of withdrawing policy coverage when the subject automobile was operated by a person other than the owner only in the event such withdrawal did not conflict with the statute or laws in question.’ (Italics ours.) So here, the restrictive endorsement may be said to have the limited effect of withdrawing policy coverage when the automobile was operated by a person under the age of 25 years only to the extent that such withdrawal did not conflict with section 415.
While the California courts have not had occasion to consider this precise question the decisions in other jurisdictions having similar financial responsibility laws where the question has arisen under like circumstances as here, are to the effect that notwithstanding the greater coverage provided by the policy, recovery is limited to the minimum figures fixed by the statute. In Landis, for Use of Talley v. New Amsterdam Casualty Co., 1952, 347 Ill.App. 560, 107 N.E.2d 187, the policy named only the owner, E. A. Peters, as the insured. While the automobile was driven by one Landis, with the permission of the owner, it was involved in an accident as a result of which one Talley sustained bodily injuries for which she recovered a judgment against Landis in the sum of $30,000. Illinois has a financial responsibility law, section 58k of which is substantially identical with paragraph (a) and subparagraph (a) (2) of said section 415 hereinbefore quoted. Likewise, the policy there contained a condition identical with condition 8 of the policy in the instant case. After the recovery of the judgment against Landis, Talley instituted an action against the insurance company on the policy and recovered a judgment in the sum of $30,000 which, while within the policy limit, was in excess of the amount fixed by the financial responsibility law of Illinois, namely $5,000. The court said (107 N.E.2d at page 192): ‘There is also a contention made in this Court that the policy coverage should be limited to $5,000.00 since Section 58e of the Motor Vehicle Financial Responsibility Law provides that proof of financial responsibility shall mean proof of ability to respond in damages in the amount of $5,000.00. The provision of the policy referred to as condition 6 [identical with condition 8 of the policy here] is specifically to the effect that where the provisions of the Motor Vehicle Financial Responsibility Law of any State are to be read into the policy, such provisions are to be effective ‘to the extent of the coverage and limitation of liability required by such law, ‘but not in excess of the policy limits in amount. It is obvious that the word ‘coverage’ in the quoted portion of condition 6 could only refer to coverage required by the Financial Responsibility Law. Such required coverage was in the sum of $5,000.00. This construction is reinforced by the further provision that, in no event would such coverage exceed the limits of liability stated in the policy. A judgment, therefore, would be justified under the circumstances, in the sum only of $5,000.00 and costs of suit.'
Other authorities to like effect will be found cited in the annotation in 29 A.L.R.2d 811.
Inasmuch as section 415 requires insurance in the aggregate amount, exclusive of insurance and costs, of $10,000 for bodily injuries to two or more persons in any one accident and the total amount awarded by the judgment herein is greater than this, it is to that extent excessive and must be reduced accordingly. As the total amount of the judgments recovered for bodily injuries against the insured by the persons involved in the accident, including the Friedmans, the amount of whose judgments must be considered although they are not parties to this action, aggregates $16,900, each of the respondents is entitled to judgment as follows:
Sophie Shapiro, 58/169ths of $10,000 or $3,432.25; Harold Shapiro, 5/169ths or $295.86; Toinette Karvas, 5/169ths or $295.86; Richard Karvas, 58/169ths or $3,432.25.
In addition Harold Shapiro is entitled to judgment for $600 by virtue of his judgment for property damage and each of the respondents is entitled to the costs incurred in the personal injury actions as follows: Respondents Shapiro, $98.14; and respondents Karvas, $48.75, together with interest at the rate of 7 per cent per annum on the aggregate of the judgments in favor of the respective respondents from July 26, 1956.
The judgment is reversed with directions to the trial court to amend its findings of fact and conclusions of law in accordance with the views herein expressed and enter judgment accordingly.
Appellant to recover costs of appeal.
1. Section 410, Vehicle Code, provides that the operator's license of any person who has suffered a final judgment to be rendered against him for damages to property ‘In excess of one hundred dollars ($100) or for damage in any amount on account of bodily injury to or death of any person resulting from the operation’ of a motor vehicle shall be suspended until such judgment has been paid and ‘until the judgment debtor gives proof of financial responsibility in future’; and, section 414 defines what shall constitute ‘proof of ability to respond in damages.’ There is no claim here that the insured had previously suffered a final judgment for damages resulting from the operation of a motor vehicle which they had failed to satisfy.
PATROSSO, Justice pro tem.
SHINN, P. J., and VALLEÉ, J., concur.